A central question in mammalian development is how different cell types arise during embryogenesis. The goal of this proposal is to discover molecular signals that control the initial stages of hepatocyte differentiation from the endoderm in mouse development. While considerable understanding exists on the formation of mesoderm and ectoderm lineages, e.g., signals regulating myogenic factors and homeobox proteins, we know virtually nothing about the differentiation of endoderm. Cells from the endoderm give rise to critical components of many internal organs, such as in the liver, pancreas, lung, and intestine. It is now feasible to investigate endoderm differentiation, considering the following recent advances: a) Our discovery that hepatocyte nuclear factor 3 (HNF3) is expressed at the onset of endoderm development; b) that extracellular matrix molecules coordinately induce HNF3 and hepatocyte differentiation; and c) our development of embryo cell culture systems that permit the analysis of early inductive processes in vitro. I propose to extend these findings with the following specific aims: 1. To determine when regulatory factors are activated during the onset of hepatic differentiation, by in vivo footprinting analysis of sequences bound by such factors. This will identify initial genetic responses of pre-hepatic endoderm cells to inductive signals in the embryo. 2. To identify signalling pathways that initiate hepatocyte differentiation, using tissues and cell lines from undifferentiated mouse endoderm. Specifically, we will investigate the roles of extracellular matrix proteins and diffusible molecules on hepatic differentiation. 3. To reveal how early developmental signals control the level and activity of HNF3 at the onset of liver gene expression. The mechanisms of genetic control discovered by this proposal should be common to the initial differentiation of other endodermal cell types. Understanding this problem is fundamental to understanding the proper growth and development of mammals.